The economic value of cutting prices should not be underestimated. In March 2004, Procter & Gamble cut prices of Tide by 47% and Ariel by 28%, challenging Hindustan Lever’s pole position in this market. HLL responded in like and a furious battle ensued. How this ended is another story. What’s relevant is this: P&G’s volume growth did increase, but HLL’s growth did too, and so did its market share. Continue Reading →

The RBI is in no hurry to cut interest rates despite inflation trending low for several months now and there being no obvious immediate reason why it should move up sharply. Raghuram Rajan, the RBI governor, may have good reasons to be cautious though, considering what happened during the previous governor D. Subbarao’s tenure. He took charge as the governor in September 2008 and stayed on for 5 years. His tenure’s start coincided with the global financial crisis. The governor and the government joined hands with a monetary and fiscal stimulus to protect India’s economy and financial markets. Continue Reading →

Fulford (India)’s parent Dashtag, a subsidiary of Merck & Co. has postponed its delisting plans, a decision it has attributed to a sharp rise in Fulford’s share. But a reference to Sebi’s decision to amend the delisting regulations indicates some influence from that side as well. Shareholders reacted with dismay, sending the stock down by 20%on Tuesday to Rs 1,417.3–locked at the lower end of the circuit filter. Dashtag informed Fulford in a letter that it has received all approvals needed for it to make an open offer. Continue Reading →

The relationship between Diageo-controlled United Spirits and the UB group has taken a curious turn. A company meeting called last week to put to vote a number of related material party transactions, saw minority shareholders vote against all UB group-related transactions except for one. Link. In another development, shareholders rejected a postal ballot for a related party transaction, in which United Spirits was to enter into an arrangement with Diageo, to make and sell products under license and also market products made by Diageo. This resolution required three-fourths of non-promoter shareholders to vote in favour, but it got only 70.2% votes in favour. Continue Reading →

The new Bharatiya Janata Party government in Rajasthan was first off the reform block. Its move to liberalise the state’s labour laws is targeted at attracting more investments by projecting an employer-friendly image. Of course, labour is just one of the factors for investing in a state, along with others such as ease of doing business and getting approvals, transparent policies and infrastructure.

State Bank of India has got government approval to raise equity capital Rs 11,576 crore in equity capital. SBI said that it will raise Rs 2,000 crore by way of a preferential equity issue to the government, which is its main shareholder, and also raise Rs 9,576 through a qualified institutional placement. The government’s approval is subject to its stake in the company not falling below 58%, from the current level of 62.3%.

In the previous article, the main problems facing the government and the RBI were listed –a falling rupee, slowing growth and rising inflation. What is needed at this stage is confidence-building measures rather than the fear-inducing steps taken, such as the one imposing capital controls. Foreign investors have been caught on the wrong foot in many countries, where they were prevented from taking their dollars out. They need to be reassured that option is not on the table. Continue Reading →

India’s stock markets crashed by 769 points on August 16, as investors reacted to good news in the US and bad news at home. Stock markets fell and the rupee has crossed the Rs 62-mark, as the RBI’s capital control and gold import restriction measures appear to have caused panic.

Equity markets in the emerging market sphere are celebrating after the US Federal Reserve’s statement issued on July 31. The Fed’s statement, that the US economy grew at a modest than expected pace in the first half, has been taken as a sign that the Quantitative Easing ‘taper’ is nowhere in sight. They may be right but they should also pay heed to the Fed’s statement about the improving health of the US economy, and if upcoming indicators point to a recovery on expected lines then the Fed may commence a taper.

Vivimed Labs is acquiring a drug-making facility in India, that comes with regulatory approval from the US Food and Drug Administration (US FDA), giving it acess to the US market. It will get two products as part of the deal and some outsourcing contracts that will give it access to quicker revenue streams. In the longer run, it plans to file to sell new drugs from this facility.

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US-based Johnson Controls and Japan’s Hitachi Appliances have formalised their agreement to form a joint venture that will acquire Hitachi Appliances’ global air-conditioning business. The deal was announced in December 2013 and was to have started operations in 2014, but its closure has stretched all the way till 2015.

UB Engineering does not have a board any more as the company announced that its two remaining directors have resigned too. On Thursday, the Vijay Mallya-group engineering company said that Alfred Tuinman, executive director (commercial), had resigned with effect from April 3, 2014.

Bharti Airtel is seeking permission from its shareholders to transfer its data center and managed services (DCMS) business to a subsidiary company. The company’s board had given its permission for the transfer in July.

The Indian government took yet another step to limit the imports of gold and silver, to counter the country’s widening current account deficit. Gold is an asset that may be viewed as being unproductive by some but Indians have traditionally viewed them as a safe investment and a coveted accessory.

Mahindra and Mahindra (M&M) is planning to take over the trucks business of its subsidiary Mahindra Trucks & Buses. The business will be transferred to M&M through a scheme of arrangement, after being approved by M&M’s board .

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